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AI Boom: Big Tech Faces Cashflow Crisis

Valve's Steam Deck OLED is facing intermittent stock shortages in some regions due to memory and storage shortages, according to The Verge. This news comes as big tech companies are significantly increasing their capital expenditure (capex) on AI, potentially impacting stock valuations, as reported by Fortune. Meanwhile, the Federal Reserve faces a complex economic landscape, with recent data potentially influencing its decisions on interest rates, also according to Fortune.

The Steam Deck OLED's stock issues were confirmed on the Valve website, which cited memory and storage shortages as the cause, according to The Verge. The report noted that the handheld PC gaming device had already been out of stock in the US for a few days.

Simultaneously, the tech industry is grappling with the financial implications of the AI boom. Fortune reported that Evercore ISI analysts warned that the substantial capex on AI by major tech companies could potentially lead some to become cash-flow negative. Meta is expected to spend $55 billion on AI capex this year, while Alphabet plans to double its capex to $180 billion, and Amazon anticipates a 50% increase to $200 billion, according to Evercore. This increased spending has contributed to volatility in the S&P 500.

Adding to the economic complexities, the Federal Reserve is navigating contradictory economic data. Fortune reported that a robust jobs report from last week has made the situation more difficult for Jerome Powell, the Fed chair, as it contradicts the previously held belief of a slowing economy. Prior to the report, there was a roughly 40% probability of a 25bps rate cut at the FOMC's next meeting in March, but the jobs report, showing nonfarm payroll employment rose by 130,000 in January, shifted the odds to over 92% for no action.

In other news, a Hacker News article discussed GrapheneOS, an operating system focused on privacy and security, and VentureBeat explored the race to real-time AI and the challenges of exponential growth in technology.

AI-Assisted Journalism

Synthesized from multiple sources. Reviewed for accuracy.

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